Sunday, April 1, 2012

Industry in India Helps Open a Door in Pakistan

Responsible capitalism can change the world, the emphasis is on Resonsible. Rajiv Kumar is doing just that.

However, we have to reintroduce pluralism to prevent the right wing Pakistani hate for India, and the right wing Hindus hate for foreign companies in India. Vandalizing the foreign companies goes against our own growth and prosperity. It is the 1% every where that is intolerant, we cannot push them to the corner, they will dig in their heels. Instead we have to launch a long term program to open up their hearts and minds towards growth, the growth that lifts up every one.

Here is a possible opportunity for Indians, which will generate opportunities for the Pakistanis. Together, we can flourish. We have to lay the foundation to openness along business to make it sustainable.

Industry in India Helps Open a Door to the World

LAHORE, Pakistan — On the day the Indian trade delegation came across the border, Pakistan was having another political crisis. The prime minister was embroiled in a showdown with the country’s Supreme Court. Early elections were rumored. And Islamists had just staged a rally in Karachi to protest “foreign intervention” on Pakistani soil.

Not, perhaps, the perfect moment to hammer out closer trade ties.

Yet Rajiv Kumar, a leader of the Indian delegation, was pleased. It was mid-February, and his business group was staging the first Indian trade show ever held in Pakistan. Tens of thousands of visitors would attend during three days. And Indian and Pakistani business leaders, as well as both countries’ commerce ministers, swapped cards, sipped tea and feasted at lavish banquets. “Look at this!” Mr. Kumar exclaimed as his car rolled up to the convention center here in Lahore, where crowds were thronging for the trade show. “My God! Quite good, I’d say.”

One truism about the tortured relationship between India and Pakistan is that there is never a perfect moment. For six decades, through three wars and one nuclear standoff, diplomats have tried, and failed, to improve relations. Now, the private sector is giving it a shot. Trade has become the most promising opening in the latest round of diplomacy, as progress remains largely stalled on tough issues like terrorism, water rights and the status of Kashmir.

The foray into Pakistan is further proof of the increasingly important role of India’s private sector in foreign policy. India’s leaders, eager for a bigger footprint in global affairs, now aspire to a permanent seat on an expanded United Nations Security Council. But the Indian Foreign Service, though consisting of top-notch officers, is too understaffed to provide a comprehensive global presence. To compensate, the government often relies on the private sector to serve as an intermediary abroad. India’s two leading business groups — C.I.I. (the Confederation of Indian Industry) and Ficci (the Federation of Indian Chambers of Commerce and Industry) — now have offices around the world and sponsor informal diplomatic dialogues between India and countries like Japan, China, Singapore and the United States.

As India’s growing economy demands more natural resources, its business leaders have led the country on an aggressive push into Africa and South America. Last year, Prime Minister Manmohan Singh toured Africa, pledging aid and good will in a high-level trip encouraged by an Indian private sector competing with China for resources on the African continent.

“These are places that are incredibly important to India, but the Indian state doesn’t have the resources to maintain a major presence,” said Ashley J. Tellis, a former American diplomat who served in India. “Business has really become the de facto substitute for Indian diplomatic engagement. And that works out nicely for India.”

India, a nation of 1.2 billion people, has about 800 diplomats serving in 162 missions and posts around the world. The United States, by comparison, has a diplomatic corps of more than 11,000. Even tiny Singapore surpasses India, with 847 foreign service officers.

In a background interview last year, a senior Indian official agreed that the country’s diplomatic corps was far too small to adequately represent India’s global interests. An expansion and hiring program is under way, but the process remains tediously slow; as a result, India’s Ministry of External Affairs is often forced to borrow bureaucrats from other ministries. Or, the senior official said, the ministry sometimes leans on the private sector.

“The presence of Indian corporations, both public and private, does help to expand our presence,” the official said. “Our footprint will also expand through the private sector.”

Cautious Optimism

Mr. Kumar last visited Lahore in November 2008, at a moment of cautious optimism. Trained as an economist, Mr. Kumar, who was then leading an Indian research group, met with members of a Pakistani research group to discuss their nations’ relationship amid speculation that Mr. Singh, the Indian prime minister, would soon make a historic visit to Pakistan.

Less than two weeks later, militants trained in Pakistan assaulted Mumbai in an audacious and vicious terrorist attack, killing at least 163 people and enraging the Indian public. Any chance of a diplomatic breakthrough was shattered as diplomats worked to avert a military confrontation.

By 2010, Mr. Kumar had joined Ficci, the Indian business group, with an agenda of expanding the group’s influence in India’s neighborhood and creating a fluid and interconnected South Asian market. He began traveling to Bangladesh, Sri Lanka and Nepal, where the prime minister and other top leaders received him.

“More and more, economics and commerce are seen as the primary drivers of international relations, which they were not in South Asia until very recently,” said Mr. Kumar, who is now Ficci’s secretary general.

To a large degree, Mr. Kumar has been playing catch-up. For more than a decade, the other major Indian business group, C.I.I., has operated as one of the most influential interlocutors of Indian foreign policy, helping to facilitate closer Indian ties with Japan, Singapore and, most important, the United States.

In 2001, C.I.I. partnered with the United States-based Aspen Institute to sponsor a meeting between Indian and American “thought” leaders in the Indian city of Udaipur. The United States and India, after decades of frosty relations, had suddenly warmed up to each other, especially after a visit to India by Bill Clinton. But neither side knew how to move forward.

The Udaipur meeting brought together Henry A. Kissinger, the former national security adviser Brent Scowcroft, the Harvard scholar Joseph S. Nye Jr. and others on the American side to meet with an Indian delegation that included the industrialist Ratan N. Tata and the influential diplomat Naresh Chandra.

“We started talking about defense, about energy,” recalled Tarun Das, the former head of the C.I.I. “We started talking about H.I.V./AIDS. The dialogue went into: ‘What else can we do? How can we build trust between the two countries?’ There was only mistrust after 50 years.”

Since then, the C.I.I. has sponsored 14 more exchanges in a United States-India relationship that, if still fractious at times, is fundamentally changed. The two countries are now strategic partners, with growing cooperation on defense issues where one had not existed before. Today, India buys American military hardware and participates in joint exercises with the United States.

The most dramatic concept borne of that initial meeting between the two countries involved cooperation on nuclear energy, in what eventually became the landmark United States-India Civil Nuclear Agreement. The deal was criticized in both countries, but it was eventually approved, if still not fully carried out.

In 2008, when the United States Congress threatened to vote down the measure, India’s government got lobbying support from its most potent ally: the Indian private sector, which included Indian-Americans who had prospered in business, science and technology in the United States and had developed one of the most influential lobbies in Washington.

Ashok Malik, a journalist who was one of the writers of an academic analysis of India’s private sector diplomacy, said the influence of Indian business is evident beyond the changed relationship with the United States. In 2005, President Hugo Chávez of Venezuela was greeted with a big reception in New Delhi at a time when Indian leftists were part of the coalition government. Two years later, with the leftists no longer in the coalition, India’s president skipped Venezuela on a tour of South America, instead stopping in Chile and Argentina, where Indian corporations had business interests.

Mr. Malik said Indian diplomats were now trained to consider business development as a primary part of their job. “Before, commerce was beneath public policy,” he said. “Now they are talking individual deals.”

Business has also become a primary conduit for increasing India’s footprint in East Asia, China’s backyard. Singapore, Japan, Taiwan and Australia have each increased business ties, partly as a strategy to draw closer diplomatically to India and possibly nurture a counterbalance to China. At the same time, the C.I.I. is quietly sponsoring yet another dialogue, this time with China itself. “We are slowly trying to see if there can be some building of trust with China,” Mr. Das said in an interview last year. “It is much more difficult than with the Americans.”

At the convention center in Lahore in February, Pakistani soldiers were posted everywhere, assault rifles in full view as they awaited the arrival of Indian delegation. Mr. Kumar had come two days early, to open the trade booths, but now the Indian commerce minister, Anand Sharma, was arriving with his Pakistani counterpart, as well as the Indian trade delegation. Security was a concern. A careful reconciliation between India and Pakistan has been under way since July 2011, eight months after the Mumbai attacks, with efforts being made on both sides of the border. Mr. Sharma’s visit was a significant gesture: he was the first Indian commerce minister ever to make an official visit to Pakistan, though few people expected any breakthroughs.

“I see it as a symbolic act, a vaccination against the right-wing groups who will oppose India,” Mr. Kumar said of the trade show and Mr. Sharma’s visit. “If this is successful, the next one can be bigger.”

Pakistan is easily India’s toughest foreign policy challenge, with hard-liners on both sides showing little desire to compromise, yet Mr. Kumar believes progress is possible because the middle class in both countries wants to ease hostilities and focus on economic growth.

Mr. Malik noted that the rise of India’s middle class, as well as the growing domestic influence of the private sector, has created a quiet constituency for easing hostilities with Pakistan. “The growth phenomenon has made the Indian middle class less tolerant of adventurism, lawlessness and war,” he said. “It is still worried about terrorism. But it doesn’t want to fight wars. It has other things to do.”

A Cold War Legacy

India’s political establishment is still grappling with redefining the country’s foreign policy, and its cold war legacy of nonalignment still holds a lingering and potent appeal. As the private sector (and Mr. Singh) have pushed India toward closer ties with historical rivals like the United States, and now Pakistan, a strong reaction has occurred in some quarters. Many leftists say the government is pushing India too close to the United States and kowtowing to corporate interests. Right-wing Hindu groups are suspicious of any interaction with Pakistan.

And others note that the corporate sector is protective of its own vested interests. Mr. Tellis, the former American diplomat, said India’s uncertain response to the Arab Spring was partly because the nation’s private sector — which has major business dealings in the Persian Gulf — was hesitant to embrace political change.

“They are simply afraid that if they end up supporting revolutionary movements, many of their economic interests that have been put in place, private sector interests, would be at risk,” Mr. Tellis said. “These interests feel very uncomfortable with change in the status quo in the gulf.”

In Pakistan, the slow progress being made on trade could be derailed by a new terrorist attack, a risk Mr. Kumar regards as unavoidable. Meanwhile, movement on issues like Kashmir and terrorism is almost nonexistent. Still, two weeks after the Indian trade trip, Pakistan announced a change in rules that could greatly expand the number of products imported from India — a business and diplomatic victory.

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